OPINION: Better nonprofit leadership will help avert future fundraising crises

Marc PitmanFundraising is in or close to crisis in the UK and USA in part because senior leaders are confused about their strategic roles. Marc Pitman presents the results of a survey that shows just how confused they are.

 

You don’t have to have an extensive look into the nonprofit sector to realize that the entire sector is on the brink of tremendous change. Demographic forces, political forces, and competition for resources is causing even municipalities to feel they are at odds with nonprofits.

Our research suggests that one explanation for the issues in the sector could be a confusion over leadership roles.

In research we conducted for the Nonprofit Sector Leadership Report, only 52 per cent of board members knew if their nonprofit had a strategic plan. This is the group that is supposed to be setting the course for the nonprofit and setting objectives for the CEO.

So it’s not surprising that this research shows that nonprofit executive directors are experiencing increased levels of insecurity. Boards aren’t setting the course or even supporting the executive director. It’s probably little surprise that 62 per cent of respondents said their nonprofit CEO was not getting at least an annual review from the board. How can the board review performance when they aren’t clear what the performance should be?

“Any scaremongering reporter or politician will have a field day with ‘charities are bad’ stories as long as the leaders in these organizations remain confused and quiet.”

Many leaders know that their existing systems aren’t working and 36 per cent of respondents said staff turnover at their nonprofits was “high”. But with the confusion at boards level, CEOs vacillate in implementing changes. They try a new solution but grow afraid of the new approach failing so pull back before results can be seen. In our research, organizations with a strategic plan in writing, reported having a board more likely to be open to taking calculated risks (65 per cent to 51 per cent).

It’s no wonder that while 85 per cent of leaders said communicating a compelling vision was in their top three priorities, 62 per cent said they weren’t even sure how to create one! This lack of clarity is fundamentally harming the foundations of the sector, leading to donor disillusionment and regulatory threat.

 

The cost of a leadership vacuum

If similar strategy confusion and confusion over leadership roles exists in the UK, that helps explain what is happening to the charity sector there. Sloppy, sensationalist reporting created a firestorm of attacks on fundraising tactics. The stories showed charities being more and more ruthless, even driving retirees to their death. The media shouting grew so loud that the British government enacted sweeping changes to the nonprofit sector, practically overnight,changes no-one would even think about inflicting on any other group in the UK.

“Nineteen per cent of leaders said they had a strategic plan but it wasn’t written down anywhere. It’s important to know what your nonprofit’s plan is, but it’s useless if it remains in your head.”

This travesty was allowed because nonprofit leaders were mute – a report by a committee of Parliamentarians explicitly blamed boards for not getting a handle on the fundraising situation. Boards of directors should have taken a stand. They should have been able to revisit the work they did creating a collaborative strategic plan. They should have been able to consult their confident nonprofit leader who hardwired that plan into her nonprofit. They should have spoken out loudly about their organization’s story and values. They would’ve proudly talked about the impact donors are having through their organization. They would’ve given readers a different storyline.

But as indicated in the study, they were confused about their role, so they said nothing. They let the media and government run roughshod over the work of countless good organizations and jeopardize the relationships with millions of committed donors. Were it not for the galvanizing work of some academics and some consultants, the entire nonprofit sector in the UK would now be under authoritarian rules that would have, at worse, effectively wiped out much of the charitable sector; at best, relegated all nonprofits to mom-and-pop start-ups.

 

In the United States too

We are seeing the same conditions here in the USA. Media stories of reported excess at Wounded Warriors were not only one-sided but went virtually unanswered. Most nonprofit leaders seemed to just heave a sigh of relief and say: “Glad that’s not me.” Fortunately, groups like the Charity Defense Council and publications like NonProfitPRO did real investigative journalism to offer a more complete and reasoned picture. For instance, they pointed out that the amount of investments the ‘bad’ Wounded Warrior made to veterans exceeded all of the investments of any of the other ‘good’ veteran’s nonprofits combined.

But the ideological story of greedy charities pickpocketing unsuspecting seniors remains strong. This is often seen in the commonly repeated notion that ‘overhead expenses’ at a nonprofit are ‘bad’.

Cities and towns are almost always seeing nonprofits as ‘takers’ from the community rather than ‘givers’ to it. They see a loss of tax revenue where they should be able to see overwhelming, tangible benefits from vibrant nonprofit organizations.

In March, a Californian Assemblyman introduced Assembly Bill 2855. This bill would have required any nonprofit’s website that could have been read by a citizen of California to Agitaor item on 2855have a ‘warning label’. The warning would include an exhaustive – and misleading – so-called “overhead expenses disclosure” page on every website, a link to that page being prominently displayed in the upper right corner of every web page, and that the “overhead expenses disclosure” would be included on the first page of all fundraising communications.

Again, this largely went unanswered. Were it not for some loud supporters of the nonprofit sector like Roger Craver at TheAgitator.net and Bob Tigner at The Association of Direct Response Fundraising Counsel, this bill may have passed out of committee. As it was, the bill was effectively silenced. For this session.

 

A way forward

Any scaremongering reporter or politician will have a field day with these ‘charities are bad’ stories as long as the leaders in these organizations remain confused and quiet. Clearly, with our sector in the crosshairs of legislative initiatives and bad journalism, the days of trusting our programs to ‘speak for themselves’ are over.

We need to take a stand. Not defensively replying to old attacks, but proactively talking about our vision for the community and the impact donors are having.

We need to change the storyline, bringing it back to something that changes our communities. Right now the storyline is just finely calibrated to sell papers and buy votes. But we are here to feed the hungry, house the homeless, protect the animals, conserve the environment. We are here to improve the quality of life for everyone.

That is a great vision to share. It’s time we did.

 

Sounds obvious, but…write down your plan

Creating a compelling vision easily understood by all is a real struggle for the majority of nonprofit CEOs. But we made a surprising discovery when we did a deep dive into the data. When we separated the responses between leaders who said their nonprofit had a written strategic plan and those who said they didn’t, we found that:

Over three-quarters of leaders with a written strategic plan said they also had a compelling vision understood by stakeholders.

This dropped to less than half of leaders in nonprofits without a written strategic plan.

Concord leadership Charts

So if your nonprofit’s board or leaders are struggling to share its story, there’s a good chance you’re missing the strategic plan. Those with a written strategic plan have much of the storytelling foundation has already laid.

The key appears to be to write it down. In our research, we found 19 per cent of leaders said they had a strategic plan but it wasn’t written down anywhere. It’s important to know what your nonprofit’s plan is, but it’s useless if it remains in your head. Getting it on paper allows more people to comment and contribute. And it helps your organization’s leadership sing from the same page.

It’s also important to use the plan in performance reviews and goal setting. Going through a planning process has some value. But the magic comes from hard-wiring that plan into the daily life of your organization. This allows the board to evaluate its executive director on criteria both agree to. This allows staff to see their contribution really does contribute to the whole. And it allows donors and other community members to more clearly see the positive impact the organization is making.

One other strategy suggested by the data is to create a succession plan. The Pew Center reports that in the USA alone 10,000 Baby Boomers are reaching retirement age every day. So leadership transition is inevitable for the next nineteen years. Yet 77 per cent of responders said their nonprofit did not have a succession plan or even a leadership development program.

Rather than pretending this demographic shift won’t affect us, we should plan for it to come. Have the conversations about who will lead if the current leader isn’t able to, and who is being groomed into leadership.

 

We don’t have to simply take what comes at us

As we take responsibility for articulating our vision, we grow stronger, become more confident leaders, and learn to communicate the good we are doing in ways that resonate with people inside and outside our organization. We can then start creating a new lens through which to view nonprofits.

The best part? As each of our nonprofits learn to excel at telling the stories, we’ll be able to redirect more resources to our cause than to fighting political overreach, we’ll be able to more effectively transform our communities into the better places we know they can be, and we’ll know that the only ‘warning label’ needed on any of our donation pages would be:

“WARNING: You are about to make an incredibly good impact with your gift.”

 

 

 

AM logos May 2016

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